Comments

Content

THIS MEMORANDUM CONSTITUTES AN OFFER ONLY IF A NAME APPEARS IN THE APPROPRIATE SPACE PROVIDED BELOW AND IS AN OFFER ONLY TO THE NAMED OFFEREE. NO PORTION OF THIS MEMORANDUM MAY BE DUPLICATED FOR ANY PURPOSE. THIS MEMORANDUM CONTAINS CONFIDENTIAL AND/OR TRADE SECRET INFORMATION. NO OFFEREE IS AUTHORIZED TO RELY UPON ANY INFORMATION WITH RESPECT TO THE SECURITIES DESCRIBED IN THIS MEMORANDUM OTHER THAN INFORMATION CONTAINED IN THIS MEMORANDUM.

Scarlet Matador Fund, LLC, Texas Limited Liability Company (the “Fund”), is offering for sale (the “Offering”) up to 499 Preferred Units (a “Unit” and collectively, the “Units”), with a minimum subscription of $40,000 for Two Units. Management of the Fund has a solid track record and historic success in the multifamily industry. The Fund is offering the Units on a “best efforts”, basis by its officers and directors. All proceeds from the sale of Units up to the Minimum Offering ($500K) will be placed in an escrow account and will immediately be made available for use by the Fund once the Minimum Offering has been subscribed for. While the Fund has not done so as of the date of this Memorandum, it may engage broker/dealers who are members of FINRA to assist with the Offering and pay commission of up to 5% (five percent). The Securities are being offered to “Accredited Investors” only. THE SECURITIES OFFERED HEREBY ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK, AND SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."

The minimum purchase requirement is 2 Units for $40,000. The Fund may pay commissions or fees to licensed broker-dealers and/or finders in an amount not to exceed 5%. Commissions will only be allocated once funding has cleared. The maximum investment in the Units cannot exceed $9.98 million. Therefore, no investor will be permitted to purchase more than $9.98 million in Units.

THESE SECURITIES ARE BEING SOLD IN TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING. THE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") IN RELIANCE UPON EXEMPTIONS UNDER SECTION 4(2), REGULATION D 506, AND 4(6), THE ACCREDITED INVESTOR EXEMPTION. THESE SECURITIES ARE SPECULATIVE, NONLIQUID AND INVOLVE SIGNIFICANT RISKS.
------------------------------------------------------------------------------------------------------------

The Date of this Private Placement Memorandum is January 1, 2010

2|P a g e

CONSIDERATIONS THIS PRIVATE PLACEMENT MEMORANDUM AND THE EXHIBITS HERETO (COLLECTIVELY, THE "MEMORANDUM") HAVE BEEN SUBMITTED ON A CONFIDENTIAL BASIS FOR USE BY A LIMITED NUMBER OF SOPHISTICATED INVESTORS WHO ARE ACCREDITED INVESTORS SOLELY FOR, AND SHOULD BE USED ONLY IN CONNECTION WITH, A PROSPECTIVE INVESTOR’S CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OF SCARLET MATADOR FUND, LLC ("SCARLET MATADOR FUND, LLC" OR THE "FUND") DESCRIBED HEREIN. ITS USE FOR ANY OTHER PURPOSE IS NOT AUTHORIZED. THIS MEMORANDUM CONSTITUTES AN OFFER ONLY TO THE OFFEREE TO WHOM THE MEMORANDUM HAS BEEN DISTRIBUTED. ANY REPRODUCTION OR DISTRIBUTION OF THIS MEMORANDUM OR RETRANSMITTAL OF ITS CONTENTS, IN WHOLE OR IN PART, WITHOUT THE PRIOR WRITTEN CONSENT OF THE FUND IS PROHIBITED. THIS MEMORANDUM CONTAINS CERTAIN INFORMATION OF A HIGHLY CONFIDENTIAL NATURE. THE RECEIPT OF THIS MEMORANDUM CONSTITUTES AN AGREEMENT ON THE PART OF THE RECIPIENT HEREOF TO MAINTAIN THE CONFIDENTIALITY OF THE INFORMATION CONTAINED HEREIN OR ANY ADDITIONAL INFORMATION SUBSEQUENTLY DELIVERED IN CONNECTION HEREWITH. PROSPECTIVE INVESTORS WHO ACCEPT THIS MEMORANDUM OR BECOME AWARE OF THE INFORMATION CONTAINED HEREIN MUST UNDERSTAND AND COMPLY WITH THE EXTENSIVE FEDERAL AND STATE SECURITIES LAW RESTRICTIONS PLACED UPON THEIR ABILITY TO DISCLOSE INFORMATION CONTAINED HEREIN TO OTHERS OR TO PARTICIPATE IN OR OTHERWISE EFFECT OR FACILITATE ANY TRANSACTION RELATING TO ANY SECURITIES OF THE FUND. PROSPECTIVE INVESTORS WHO CANNOT COMPLY FULLY WITH SUCH RESTRICTIONS SHOULD NOT REVIEW THE INFORMATION CONTAINED HEREIN AND SHOULD IMMEDIATELY RETURN THIS MEMORANDUM TO THE FUND. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH OR APPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ("SEC") OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION, NOR HAS THE SEC OR ANY SUCH AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE SECURITIES OFFERED HEREBY MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED, SOLD OR DELIVERED TO ANY PERSON IN ANY JURISDICTION EXCEPT IN COMPLIANCE WITH APPLICABLE LAW. SCARLET MATADOR FUND, LLC IS A TEXAS LIMITED LIABILITY COMPANY. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANY PERSON IN ANY STATE OR OTHER JURISDICTION IF SUCH OFFER OR SOLICITATION IS NOT LAWFUL. AS A PURCHASER OF THE SECURITIES IN A PRIVATE PLACEMENT NOT REGISTERED UNDER THE SECURITIES ACT, OR OTHER APPLICABLE LAW, EACH INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD, SINCE THE SECURITIES OFFERED HEREBY MAY NOT BE RESOLD UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT, OR OTHER APPLICABLE LAW, OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. ALL INVESTORS MUST UNDERSTAND AND AGREE THAT THEY WILL NOT RESELL THE SECURITIES EXCEPT IN A TRANSACTION WHICH DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT, OR OTHER APPLICABLE LAW, AS CONFIRMED BY A LEGAL OPINION ACCEPTABLE TO THE FUND, IF SUCH LEGAL OPINION IS REQUIRED BY THE FUND. THE SECURITIES OFFERED HEREBY WILL BEAR A LEGEND DESCRIBING THE FOREGOING RESTRICTIONS.
3|P a g e

NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR GIVE ANY INFORMATION WITH RESPECT TO THE FUND OR THE OFFERED SECURITIES, EXCEPT THE INFORMATION CONTAINED HEREIN. PROSPECTIVE INVESTORS SHOULD NOT RELY ON ANY INFORMATION NOT CONTAINED IN THIS MEMORANDUM. REPRESENTATIVES OF THE FUND WILL BE AVAILABLE TO DISCUSS WITH PROSPECTIVE INVESTORS, ON REQUEST, THE INFORMATION AND PROJECTIONS CONTAINED HEREIN. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS MEMORANDUM OR ANY WRITTEN OR ORAL COMMUNICATION FROM THE FUND OR ITS EMPLOYEES AS LEGAL, BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS, TAX AND RELATED. MATTERS CONCERNING THIS OFFERING THE FUND IS MAKING NO REPRESENTATION TO AN OFFEREE OR PURCHASER OF THE SECURITIES OFFERED HEREBY REGARDING THE LEGALITY OF AN INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPROPRIATE LEGAL INVESTMENT OR SIMILAR LAWS. NEITHER THE DELIVERY OF THIS MEMORANDUM AT ANY TIME NOR ANY SALE MADE PURSUANT TO THIS MEMORANDUM SHALL IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE SET FORTH HEREIN. EACH PROSPECTIVE INVESTOR, BY ACCEPTING DELIVERY OF THIS MEMORANDUM, AGREES TO RETURN IT TO THE FUND IF THE PROSPECTIVE INVESTOR DOES NOT PURCHASE THE SECURITIES DESCRIBED HEREIN OR IF THE OFFERING IS TERMINATED. THIS INVESTMENT IS SPECULATIVE AND SUITABLE ONLY FOR PERSONS WHO HAVE SUBSTANTIAL FINANCIAL RESOURCES AND MEET CERTAIN SUITABILITY REQUIREMENTS, WHO DO NOT ANTICIPATE THAT THEY WILL BE REQUIRED TO LIQUIDATE ANY INVESTMENT ACQUIRED HEREUNDER IN THE FORESEEABLE FUTURE, AND WHO UNDERSTAND OR HAVE BEEN ADVISED WITH RESPECT TO ANY RISK FACTORS ASSOCIATED WITH THIS OFFERING. SEE "RISK FACTORS” AND "SUITABILITY STANDARDS". THERE MAY BE MATERIAL INVESTMENT RISKS ASSOCIATED WITH THIS OFFERING WHICH CANNOT BE IDENTIFIED AT THIS TIME. NO TRADING MARKET IN THE UNITED STATES IS EXPECTED TO DEVELOP FOR THE UNITS. SUBSTANTIAL RESTRICTIONS WILL BE IMPOSED ON ANY SALE OR TRANSFER OF ANY OF THE SECURITIES OFFERED HEREBY. SEE "RISK FACTORS". THIS MEMORANDUM IS TO BE EMPLOYED SOLELY IN CONNECTION WITH THE OFFERING OF THE SECURITIES DESCRIBED HEREIN. DELIVERY OF THIS MEMORANDUM TO ANY PERSON OTHER THAN THE RECIPIENT NAMED ON THE COVER OR IN ANY OTHER MANNER IS NOT TO BE CONSTRUED AS AN OFFER. PURCHASE OF THE SECURITIES MAY ONLY BE MADE BY PERSONS TO WHOM OFFERS ARE MADE AND ONLY IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THIS MEMORANDUM. ALL PURCHASES ARE SUBJECT TO ACCEPTANCE BY THE FUND.

4|P a g e

NASAA UNIFORM LEGEND IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FORGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE MADE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. JURISDICTIONAL NOTES Prospective investors are not to construe the contents of this document or any prior or subsequent communications from the offerer as legal or tax advice. Each investor must rely on his own representative as to legal, income tax and related matters concerning this investment. PROJECTIONS MAY BE CONTAINED IN THIS MEMORANDUM AND ANY OTHER PROJECTIONS WHICH DO NOT CONFORM TO THOSE IN THIS OFFERING DOCUMENT SHOULD BE DISREGARDED. EVERY INVESTOR SHOULD BE AWARE THAT THE FUND HAS NO OBLIGATION, NOR DOES IT INTEND, TO REPURCHASE THE UNITS FROM INVESTORS IN THE EVENT THAT, FOR ANY REASON, AN INVESTOR WISHES TO TERMINATE THE INVESTMENT. This document is Confidential and contains proprietary information. It is intended for the exclusive use of the party of receipt. This document may not be reproduced either in part or in whole. NOTICE TO TEXAS RESIDENTS ONLY: THE SECURITIES OFFERED HEREUNDER HAVE NOT BEEN REGISTERED UNDER APPLICABLE TEXAS SECURITIES LAWS AND, THEREFORE, ANY PURCHASER THEREOF MUST BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD OF TIME BECAUSE THE SECURITIES CANNOT BE RESOLD UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER SUCH SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. FURTHER, PURSUANT TO §109.13 UNDER THE TEXAS SECURITIES ACT, THE COMPANY IS REQUIRED TO APPRISE PROSPECTIVE INVESTORS OF THE FOLLOWING: A LEGEND SHALL BE PLACED, UPON ISSUANCE, ON CERTIFICATES REPRESENTING SECURITIES PURCHASED HEREUNDER, AND ANY PURCHASER HEREUNDER SHALL BE REQUIRED TO SIGN A WRITTEN AGREEMENT THAT HE WILL NOT SELL THE SUBJECT SECURITIES WITHOUT REGISTRATION UNDER APPLICABLE SECURITIES LAWS, OR EXEMPTIONS THEREFROM.

5|P a g e

FORWARD LOOKING STATEMENTS This Memorandum contains words such as “believe,” “plan,” “expect,” “intend,” “estimate,” and “anticipate” and similar expressions that constitute “forward-looking statements.” Forward-looking statements include statements relating to the expected results of Scarlet Matador Fund, LLC’s (the “Fund”) activities and related capital expenditures, the expected results of the Fund’s strategy, the development of the Fund’s business and its model, the anticipated use of proceeds, projected expenditures and profits and the Fund’s ability to borrow funds. Such statements are based on the Fund’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Although Management believes that the expectations of the Fund’s as reflected by such forward-looking statements are reasonably based on information currently available, no assurances can be given that such expectations will prove to have been correct. Prospective investors should not rely on any of these forward-looking statements as statements of historical fact or guarantees or assurances of future performance. Actual results, performance or events may differ materially from those expressed or implied in such statements. These risks and others described under “Risk Factors” are not exhaustive. Any forward-looking statements made by the Fund in this Memorandum speak only as of the date hereof. Factors or events that could cause the Fund’s actual results to differ may emerge from time-to-time, and it is not possible for the Fund to predict all of them. Scarlet Matador Fund, LLC undertakes no obligation to update any forward-looking statement made in this Memorandum, whether as a result of new information, future developments or otherwise.

Fund Overview
Introduction The current national economic woes have created a tremendous opportunity, specifically within the multifamily real estate and multifamily capital marketplace. Market conditions along with the current administration has created a significant yield spread/pricing gap between stabilized, well operated properties and distressed multifamily assets. Agency lenders such as Fannie Mae and Freddie Mac are producing over 80% of multifamily loan volume. The remaining 20% of volume is distributed between HUD, regional and national portfolio loans, hard money and bridge lenders, and local interim bank financing. This capital distribution model offers a very competitive array of options for the acquisition of stabilized multifamily assets, but offers very little options for the acquisition of distressed multifamily assets. The multifamily property market has adjusted to this capital marketplace and prices for quality distressed asset buyers have significantly dropped to generational lows, while stabilized multifamily asset prices have dropped much less. Scarlet Matador Fund’s management team has over 10 years experience is the successful identification, acquisition, renovation, stabilization, management, marketing, and disposition of distressed multifamily assets. The management team’s deal-flow has outgrown their capital resources and has elected to create the Scarlet Matador Fund, LLC to exploit the current inefficiency that they have identified within the market. Property Management Inc (PMI) is a wholly owned company of fund management; they provide 3 rd party services to the multifamily industry such as: property management, construction management, bookkeeping/accounting, and brokerage services. PMI has been engaged to provide all of these services to all assets owned by Scarlet Matador Fund, LLC. This will not only streamline the Fund’s operations but will eliminate any “overhead” or administrative expenses for the Fund. Need These uncanny market conditions have created a solid opportunity for sophisticated investor/buyers that have a real understanding of the complex dynamics of today’s multifamily marketplace. Distressed assets buyers in this marketplace are filling a direct need of the marketplace, creating a previously unseen opportunity for the creation of tremendous stakeholder wealth. Many unconventional sellers such as special servicers, receivers, lenders, banks, federal agencies, and so on are in dire need of experienced operators to acquire these distressed assets at significantly below market prices, in order to clean up balance sheets of lending institutions. They are increasing only seeking to deal with experienced distressed asset buyers that can move quickly and can be depended on to close. These relationships are one of the key factors in the Scarlet Matador Fund’s management’s previous success. Solution The basic business model for the Scarlet Matador Fund, LLC is one that has been created and adopted by the management team of the Fund. There are always minor inefficiencies within the multifamily capital and real estate markets, but today’s other economic conditions have drastically magnified these inefficiencies. Fund management has been involved in this specific industry for over ten years and has completed multiple successful rounds of acquisitions and dispositions. Fund management has recognized the rare opportunity in today’s marketplace and has exploited the opportunity to their fullest ability. They currently have four large projects going. Their deal-flow and management capabilities are far greater than their own capital resources. As a result they have formed the Scarlet Matador Fund, LLC to not only seize the current opportunities of today’s marketplace, but also to create investor wealth.
8|P a g e

THE OFFERING TERM SHEET
__________________________________________________________________________________

This summary of certain provisions of this Memorandum is intended only for convenient reference. It is not intended to be complete and is qualified in its entirety by the more detailed information contained elsewhere in this Memorandum and in the Exhibits hereto. The full text of this Memorandum, and the Exhibits to it, should be read in detail and understood by each potential Investor. The term “Investor” shall mean qualified entities receiving this Memorandum. The Fund: Scarlet Matador Fund, LLC, formed on December 17, 2009, is a Texas Limited Liability Company. Its principal office is located at: 7111 Santa Fe Dr, Lubbock, TX 79407; Tele: 806-470-0464. Scarlet Matador Fund, LLC will purchase distressed or undervalued real estate, will manage such real estate and resell properties for a profit. Management of the Fund has a solid track record and historic success in the multifamily industry. Mr. Brent D Preston is the Founder and Managing Member of Scarlet Matador Fund, LLC. The Fund is offering for sale up to 499 Preferred Units (“Unit”) for $9,980,000, payable in cash upon subscription. The Fund reserves the right in its sole discretion to increase the size of the Offering. $20,000 per Unit. $40,000 for 2 (two) Units. Currently 1,000 Preferred Membership Interests (“Units”). All Units are to be issued and outstanding following the completion of the Offering. For general corporate and working capital purposes. See “Use of Proceeds”. 499 Preferred Units are being offered. Preferred Unit Holders will receive a + 6.5% annual return on “vested” funds, to be paid monthly, quarterly, or annually (to be determined once operations are underway in the Managing Member’s full discretion). “Vested” mean when funds are actually allocated to acquire a specific property.1

Description of the Fund:

The Manager: Securities Offered:

Pricing: Minimum Investment: Units Authorized:

Use of Proceeds: Description of Units

1

Example: The LLC received $500,000 in subscriptions in 30 days. An additional 30 days pass prior to the closing of the Fund for this first acquisition. Investors would not receive a preferred return until after closing on this first property. Example #2: the first property requires $400K in capital, the 6.5% preferred return will be computed on a pro-rata share of total $500K invested.

9|P a g e

Voting Rights:

1 vote per Unit; no active participation in the daily affairs of the Fund. The investor(s) who purchase any Units pursuant to this Offering will be restricted from selling, transferring, pledging or otherwise disposing of any Units due to restrictions under applicable U.S. Federal and State securities laws. Each investor must: (a) Execute and deliver the Subscription Agreement attached hereto as Exhibit C. (b) Wire or mail the total subscription funds to the Fund’s bank account per the instructions in Appendix C.

Restrictions on Resale:

How to Invest:

Who May Invest:

The Units of the Fund are being offered pursuant to this Memorandum solely to persons who are sophisticated and “accredited investors”, as defined in Regulation D promulgated under the Act. See the Accredited Investor Suitability Questionnaire attached hereto as Exhibit B. This Offering will be made pursuant to exemptions from registration provided by Section 4(2) of the Act, Regulation D promulgated thereunder, and exemptions available under applicable state securities laws and regulations. Persons desiring to invest in the Fund will be required to make certain representations and warranties regarding their financial condition in the Subscription Agreement attached hereto as Exhibit C. Such representations include, but are not limited to, certification that the investor is an accredited investor. The Fund reserves the right to reject any Subscription in whole or in part in its sole discretion. See “Suitability Standards.” THE SUBSCRIPTION AGREEMENT INCLUDES CERTAIN REPRESENTATIONS AND WARRANTIES OF THE INVESTOR ON WHICH THE FUND WILL RELY IN DETERMINING WHETHER TO ACCEPT THE SUBSCRIPTION. PROSPECTIVE INVESTORS ARE URGED TO READ THE SUBSCRIPTION AGREEMENT CAREFULLY AND, TO THE EXTENT THEY DEEM APPROPRIATE, TO DISCUSS THE SUBSCRIPTION AGREEMENT, THIS MEMORANDUM AND THEIR PROPOSED INVESTMENT IN THE SECURITIES WITH THEIR LEGAL OR OTHER ADVISORS.

Investor Suitability:

Plan of Distribution:

The Units are being offered on a “best-efforts” basis by the Fund. The Fund reserves the right to allow broker/dealers which are registered as such with the SEC and which are members of FINRA (“Placement Agents”) to sell the Units. The Fund may pay up to a 5% commission on the gross proceeds, plus expenses, of any Units

10 | P a g e

sold by such registered brokers. The Fund may conduct multiple closings (“Interim Closings”) up to the specified Offering amount, at which time a final closing will be held (the “Final Closing”). The Offering will be open until the Offering is reached, but no later than June 30, 2010, unless earlier terminated by the Fund, or extended for up to 180 days, at the Managing Member’s sole discretion. Subscriptions: Investors who wish to subscribe for the Units may do so by executing the Subscription Agreement attached hereto as Exhibit C and delivering the completed materials and payment for the Units to the Fund. A subscription may not be considered for acceptance unless it is completely filled out and properly executed and is accompanied by payment in full for the Units which are being purchased. Subscriptions accompanied by payment in the form of a personal check, if accepted, will be so accepted conditioned upon and subject to clearance of the check and the Units will not be delivered until the check clears. Funds accompanying any subscription not accepted by the Fund will be promptly returned to the Investor without interest thereon or deduction therefrom. All proceeds from the sale of Units up to $500,000 (the “Minimum Offering”) will be placed in an escrow interest bearing account until the Minimum Offering is subscribed for ($500K). Therefore, upon procuring $500,000, the Fund reserves the right to utilize the funds for Fund expenditures. If, after twelve months, no more than $499,999 has been procured, the Fund will refund all investment to the Subscriber with interest earned. The Units in the Fund are being offered under the exemption from registration under the Securities Act of 1933, as amended (the “Act”), pursuant to Rule 506 of Regulation D of the Rules and Regulations of the Securities and Exchange Commission. Thus, the securities which are the subject of this Offering will be “restricted securities” as that term is defined in Rule 144 of the General Rules and Regulation of the Securities and Exchange Commission. Furthermore, each purchaser must execute a Subscription Agreement acknowledging, among other things, the restrictions on transfer described above and elsewhere herein. There is no public market for the Units. By executing the Subscription Documents, each subscriber must represent, among other things, that such subscriber is acquiring the Units for the subscriber’s own account for investment and not with a view toward, or for resale in connection with, a distribution of the Units. Each subscriber is advised to consult such subscriber’s personal legal advisor for more detailed information concerning the restrictions on transfer of securities sold in a transaction such as this Offering. See the SUBSCRIPTION DOCUMENTS attached to this Memorandum as Exhibit C.

Availability of Funds:

Resales or Transfer of Units:

11 | P a g e

Risk Factors:

The Units offered hereby involve a high degree of risk. See “Risk Factors” set forth in the Memorandum and the SEC Documents.

[THIS SPACE INTENTIONALLY LEFT BLANK]

12 | P a g e

SUITABILITY STANDARDS INVESTMENT IN THE PREFERRED UNITS (“UNITS”) OF SCARLET MATADOR FUND, LLC INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE ONLY FOR THOSE INVESTORS WHO HAVE SUBSTANTIAL FINANCIAL RESOURCES IN RELATION TO THEIR INVESTMENT AND WHO UNDERSTAND THE PARTICULAR RISK FACTORS OF THIS INVESTMENT. IN ADDITION, INVESTMENT IN THE UNITS IS SUITABLE ONLY FOR AN INVESTOR WHO DOES NOT NEED LIQUIDITY IN HIS INVESTMENT AND IS WILLING TOACCEPT RESTRICTIONS ON THE TRANSFER OF THE UNITS. Investor Suitability Subject to the right of the Fund to sell Units to sophisticated and Accredited Investors ("Qualified Investors"), Units will be sold only to those investors who submit an Offeree Questionnaire in the form attached hereto as Exhibit "B" establishing to the satisfaction of the Fund that: 1. The investor is a "Qualified Purchaser," as defined as follows: (i) a natural person who, either individually or jointly with his/or her spouse, has a minimum net worth of $500,000, or a minimum net worth of $250,000, and, during the last taxable year had, and during the current year expects to have, a minimum gross income of $100,000 (net worth shall be determined exclusive of home, home furnishings and automobiles); (ii) a self-employed individual retirement plan or an individual retirement account (IRA), if the investment decisions are made solely by persons who are qualified purchasers. (iii) any organization described in section 501(c)(3)of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or a partnership, not formed for a specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or (iv) any entity in which all the equity owners are Qualified Purchasers.

2. The investor has such knowledge and experience in financial and business matters that he is able to evaluate the merits and risks of an investment in the Units. 3. The investor has the financial ability to bear the economic risk of an investment in the Units, adequate means of providing for his current needs and personal contingencies and no need for liquidity in an investment in the Units. 4. The investor is acquiring the Units for his own account for investment and not with a view to resale or distribution. 5. The investor is an “Accredited Investor” as defined in Regulation D, that is: a) Any bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); an insurance company as defined in Section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act; a Small Business Investment Company licensed by the U.S. Small

13 | P a g e

Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan; b) An association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; Any private business development company as defined in Section202(a)(22) of the Investment Advisers Act of 1940; c) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; d) Any director, executive officer or manager of the Company;

e) Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of purchase exceeds $1,000,000; f) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; g) Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered hereby, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; or h) Any entity in which all the equity owners are “Accredited Investors” as defined above.

A prospective investor in Scarlet Matador Fund, LLC will be required to represent that: (a) he or she knows that neither the Units have not been registered under the Securities Act, and he or she has no right to require such registration; (b) he or she understands that his or her Units will be restricted as set forth in the Memorandum, which includes restrictions against transfer unless the transfer is not in violation of the Securities Act, and applicable state securities laws (including investment suitability standards); (c) payment for the Units will cause no undue hardship without undue difficulty; and (d) the subscriber’s commitment to other investment programs, combined with the subscription for Units, is reasonable in relationship to net worth. Please study the terms of the Subscription Agreement, this Memorandum and all related documents carefully before you decide to subscribe for Units. The Fund will review all subscription documents and will not accept subscriptions from any person who does not represent that he complies with the applicable standards specified above.

14 | P a g e

RISK FACTORS
THE SECURITIES (“UNITS”) BEING OFFERED INVOLVE A HIGH DEGREE OF RISK AND, THEREFORE, SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. THEY SHOULD NOT BE PURCHASED BY PERSONS WHO CANNOT AFFORD THE POSSIBILITY OF THE LOSS OF THE ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD READ THE ENTIRE PRIVATE PLACEMENT MEMORANDUM AND CAREFULLY CONSIDER, AMONG OTHER FACTORS THE FOLLOWING RISK FACTORS. Management of Scarlet Matador Fund, LLC intends for the Fund to become a profitable entity via the real estate market. The risks and uncertainties described below are not the only ones faced. Additional risks and uncertainties not known to the Fund or ones known now, but believed to be less significant could also impair the business. If any of the following risks actually occur, the business, financial condition or operating results could be negatively affected. Among other things, consider the following. Fund Considerations Risks Associated with Expansion: Any expansion of operations the Fund may undertake will entail risks, such actions may involve specific operational activities which may negatively impact the profitability of the Fund. Consequently, Unit Holders must assume the risk that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to the Fund at that time, and (ii) management of such expanded operations may divert Management’s attention and resources away from its existing operations, all of which factors may have a material adverse effect on the Fund’s present and prospective business activities. Unanticipated Obstacles to Execution of the Business Plan: The Fund’s business plans may change significantly. Many of the Fund’s potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes that the Fund’s chosen activities and strategies are achievable in light of current conditions with the skills, background, and knowledge of the Fund’s founders and advisors. Management reserves the right to make significant modifications to the Fund’s stated strategies depending on future events. Future Capital Needs; Uncertainty of Additional Funding: Management of Scarlet Matador Fund, LLC currently anticipates that the net proceeds of the Offering will be sufficient to meet its development, design evolution and other working capital requirements through the first stages of its business development plan. Future capital may be required to complete development where logistical hurdles will need to be overcome. The Fund may need to raise additional funds to sustain its purchase or development activities, particularly if there is a major shift in marketplace. Adequate funds may not be available on terms favorable to the Fund, if at all, to deal with such issues. Real Estate Investments: Real estate purchase and investments (the Fund anticipates purchasing land and renovating) are subject to numerous risks, including risks due to changes in general economic conditions, local market conditions, demand factors, supply of competing properties in a market area, operating costs, interest rates, or tax, real estate, environmental or zoning laws and regulations. Labor and Power Supply: Interrupted labor or power supply may cause suspension/closure of production and damage to machinery and housing materials, which could adversely affect the Fund, particularly in terms of property renovation time schedules. Change in Economy: Changes in the U.S. economy from time to time may have an adverse or favorable impact on the profitability of the Fund. A protracted recession may also negatively impact the Fund’s profitability.

15 | P a g e

Anticipated Revenue: Although management of the Fund has a solid track record and historic success in the multifamily industry, the Fund’s results of operations may fluctuate in the future due to a combination of factors, including the overall schedules of our renovations and/or developments, the level of acceptance of by prospective buyer-renters, and any volatility in expenses such as construction costs and marketing costs. Potential liability for environmental problems could result in substantial costs: Scarlet Matador Fund, LLC is subject to a variety of laws and regulations concerning the protection of health and the environment. The particular environmental laws and regulations which apply to any given project development site vary greatly according to the site’s location, the site’s environmental condition, the present and former uses of the site, as well as adjoining properties. Compliance with environmental laws and conditions may result in delays, may cause us to incur substantial compliance and other costs and can prohibit or severely restrict project development activity in environmentally-sensitive regions or areas. Our business may be adversely affected by increases in interest rates or banks refusing to lend money: An increase in interest rates by the Federal Reserve, or banks withholding loans, could adversely affect the affordability and attractiveness of financing for the project or from prospective buyers or renters of our properties. Our cost of borrowing would also increase as a result of interest rate increases, which could, in turn, adversely affect our results of operations. We may face intense competition from other developers: Competition among real estate developers may result in increased costs for the acquisition of land, increased costs for raw materials, shortages of skilled contractors, oversupply of properties, decrease in prices, and increases in administrative costs for hiring or retaining qualified personnel, any of which may adversely affect our business and financial position. If we cannot respond to changes in market conditions as swiftly and effectively as our competitors, our business and financial position will be adversely affected. If a well financed competitor operates near our proposed location it could materially affect our business. Dependence on Suppliers May Affect the Ability of the Fund to Conduct Business: The Fund depends upon a number of suppliers for development, construction and renovations components. There is an inherent risk that certain components of the Fund’s products will be unavailable for prompt delivery or, in some cases, discontinued. The Fund has only limited control over any third-party suppliers as to quality controls, timeliness of production, deliveries and various other factors. Should the availability of certain components be compromised, it could force the Fund to develop alternative components, or employ additional third-party suppliers, which could add to development costs, and compromise delivery commitments, thus could materially adversely affecting business, results from operations and financial condition. Investment Considerations Regulations: The Fund is subject to various federal and state laws, rules and regulations governing, among other things, the licensing of, and procedures that must be followed by, and disclosures that must be made to investors purchasing securities. Failure to comply with these laws may result in civil and criminal liability and may, in some cases, give investors right to rescind their investment transactions and to demand the return of funds paid to the Fund. Because the Fund’s business is highly regulated, the laws, rules and regulations applicable to the Fund are subject to subsequent modification and change. The Fund believes it is in full compliance with any and all applicable laws, rules and regulations. Lack of Audited Financial Statements: The Fund does not have audited financial statements. In the future, the books and records of the Fund will be audited by a firm of independent certified public

16 | P a g e

accountants selected by Management. Management Discretion as to Use of Proceeds: The net proceeds from this Offering will be used for the purposes described under “Use of Proceeds.” The Fund reserves the right to use the funds obtained from this Offering for other similar purposes not presently contemplated which it deems to be in the best interests of the Fund and its Unit Holders in order to address changed circumstances or opportunities. As a result of the foregoing, the success of the Fund will be substantially dependent upon the discretion and judgment of Management with respect to application and allocation of the net proceeds of this Offering. Investors for the Units offered hereby will be entrusting their funds to the Fund’s Management, upon whose judgment and discretion the investors must depend. Long Term Nature of Investment: An investment in the Units may be long term and illiquid. As discussed above, the offer and sale of the Units will not be registered under the Securities Act or any foreign or state securities laws by reason of exemptions from such registration which depends in part on the investment intent of the investors. Prospective investors will be required to represent in writing that they are purchasing the Units for their own account for long-term investment and not with a view towards resale or distribution. Accordingly, purchasers of Units must be willing and able to bear the economic risk of their investment for an indefinite period of time. It is likely that investors will not be able to liquidate their investment in the event of an emergency. No Current Market for Units: There is no current market for the Units offered in this private Offering and no market is expected to develop in the near future. Dilution: If the Fund decides to authorize and sell additional securities current Unit Holders would most likely face a dilution in ownership. Offering Price: The price of the Units offered has been arbitrarily established by Scarlet Matador Fund, LLC, considering such matters as the state of the Fund’s business development and the general condition of the industry in which it operates. The Offering price bears little relationship to the assets, net worth, or any other objective criteria of value applicable to Scarlet Matador Fund, LLC Projections; Forward Looking Information: Management has prepared projections regarding Scarlet Matador Fund, LLC’s anticipated financial performance. The Fund’s projections are hypothetical.

[THIS SPACE INTENTIONALLY LEFT BLANK]

17 | P a g e

DISCLOSURE STATEMENTS Competition There can be no assurance that Scarlet Matador Fund, LLC’s business will not be adversely affected by competition or that the Fund will be able to maintain its profitability if the competitive environment changes. The Fund’s model is subject to changes, which could place the Fund at a competitive disadvantage relative to alternative products/services introduced by competitors. The Fund’s success will depend on its ability to continue to meet changing specifications with respect to quality, service and performance by implementing and sustaining competitive products and services. Scarlet Matador Fund, LLC’s business may therefore require, from time to time, significant additional capital and investment. There can be no assurance that Scarlet Matador Fund, LLC will be able to achieve advances or introduce new or improved products and services that may be necessary to remain competitive. The inability of the Fund to continuously improve its business model could have a material adverse impact on the financial condition and results of operations of Scarlet Matador Fund, LLC. Date of Incorporation Scarlet Matador Fund, LLC was originally formed on December 17, 2009 as a Texas Limited Liability Company. EQUITY STRUCTURE Our existing authorized capital stock consists of 1,000 Preferred Membership Interests (“Units”). All Units will be issued and outstanding following this offering. The current and, following this Offering, future equity owners of Scarlet Matador Fund, LLC will consist of the following Unit Holders:

Current Number of Common Units Management Team Investors Total 1000 -

Current Percentage of Ownership 100% 100%

Number of Units After Maximum Offering 501 499 1,000

Percentage of Ownership After Maximum Offering 50.1% 49.9% 100%

18 | P a g e

Management Team
Fund Manager: Brent D. Preston Brent D Preston brings over 5 years of direct distressed asset acquisitions experience to the management team. Upon completion of high school in Texas in 1999, he attended Texas Tech University’s Rawls School of Business, and graduated Cum Laude in Management. While attending college he began his real estate career in the acquisition of distressed single family assets, he then develop a system of pooling owner financed notes and selling to larger firms who securitized and sold in the secondary market. During this timeframe he also proceeded to become a licensed real estate agent and later a licensed real estate broker in the State of Texas. In 2005 he created The FlagStar Group, Real Estate Services LLC, which later became Property Management Inc (PMI). PMI is a full service management and brokerage firm focusing on the multifamily sector of the marketplace. PMI provides a full range of services to the industry including: property management, accounting/administrative support, construction management, repositioning strategy, feasibility services, asset management, property tax consulting, and brokerage services. In addition to PMI, Mr. Preston is engaged in multiple projects all centered on the repositioning of distressed real estate assets. He has a profitable track record of successful asset repositioning and disposition, impressive to the most seasoned investor. See Appendix A for a summary of some notable transactions Mr. Preston has completed Partner/Analyst: Aaron Morris Aaron Morris is actively involved in the operational side of PMI, he has a Texas real estate license and is a graduate of Texas Tech University. Aaron began his real estate career in the brokerage business, working at a large multi-national brokerage firm. He then joined the PMI team, and expanded his expertise into operational management, and project underwriting. Mr. Morris began Morris consulting in early 2006; he is currently engaged in multiple real estate repositioning projects throughout Texas. He is a key element in maintaining acceptable deal flow and underwriting of potential acquisitions. Investor Relations: Eric Morris Eric Morris recently ended his career as a professional football player; he formerly played division 1 football at Texas Tech University, where he was a two year starter. He brings a dynamic background to the Fund and will be engaged as investor relations liaison and will also assist Aaron Morris in underwriting potential acquisitions.

19 | P a g e

Controller/PMI Liaison: Wendy Hinkle Wendy Hinkle started out her real estate career in the brokerage sector, handling mostly residential transactions. She later joined The FlagStar Group in 2005 as executive assistant to Mr. Preston. Ms. Hinkle holds a Texas real Estate License. Throughout the years Ms. Hinkle’s capacity within The FlagStar Group, and then PMI, has grow. She will oversee all aspects of the PMI/Scarlet Matador Fund relationship. Ms. Hinkle has many years of hands on experience in the repositioning of multifamily assets, under the guidance of Mr. Preston.

See Appendix D for Advisory Board positions.

20 | P a g e

SUBSCRIPTION DOCUMENTS Each person desiring to purchase Preferred Units (“Units”) must complete, execute, acknowledge, and deliver to the Fund a Purchaser Questionnaire, Subscription Agreement and other documents in the forms contained in the Subscription Documents attached hereto. By executing the Subscription Agreement, each subscriber is agreeing that, if the Subscription Agreement is accepted by the Fund, he or she will become a Unit Holder of the Fund. The Fund, in its sole discretion, may reject a prospective purchaser’s Subscription Agreement. If the Offering is oversubscribed, the Fund may either reject the subscriptions of prospective purchasers of its choosing, reduce each prospective purchasers subscription pro rata, or some combination of the foregoing. INTEREST AND CORPORATE ACCOUNT All proceeds from the sale of Units up to $500,000 (the “Minimum Offering”) will be deposited in an escrow interest bearing account until the Minimum Offering is subscribed for ($500K). Once the Minimum Offering has been subscribed for all proceeds will immediately deposited into the Fund’s corporate account and made available to the Fund. ABILITY TO ACCEPT LIMITATIONS ON TRANSFERABILITY It is unlikely that investors will be able to liquidate their investments in the Units in the event of an emergency. A public market for the Units does not exist and there is no assurance that one will ever develop. Moreover, the transferability of the Units will be affected by restrictions on resale imposed under federal and state securities laws. ABILITY AND WILLINGNESS TO ACCEPT RISKS The economic benefit from an investment in the Fund depends upon many factors beyond the control of the Fund. Accordingly, the suitability for any particular investor of a purchase of the Units will depend upon, among other things, such investor’s investment objectives and such investor’s ability to accept speculative risks. FURTHER INFORMATION Each prospective investor and purchaser representative is invited to ask questions of, and receive answers from, the officers of the Fund and to obtain such information concerning the terms and conditions of the Offering to the extent the Fund possesses the same or can acquire it without unreasonable effort or expense, as such prospective investor or purchaser representative, as the case may be, deems necessary to verify the accuracy of the information in this Memorandum. An appointment for such purposes will be arranged upon request.

(THIS SPACE LEFT INTENTIONALLY BLANK)

21 | P a g e

OTHER SPECIFICS OF THE OFFERING Underwriting: All underwriting expenses associated with this offering will be paid by the Company out of this offering or other resources. Legal Matters: The Company is not currently involved in any litigation or legal proceedings and is not aware of any litigation pending or threatened against it. Company Accounting Period: The Company’s fiscal year end is December 31. Annual Reports: The Company intends to transmit to its Unit Holders annual reports containing financial statements as soon as practicable after the end of each fiscal year. The Company’s fiscal year ends December 31. In addition, the Company also intends to make other periodic reports to its Unit Holders at the sole discretion of Management. Working Capital and General Corporate Purposes: The Company plans to use the capital provided by this Offering for development, advertising and marketing, accounts payable or other working capital and general corporate purposes that management determines are in the best interest of the Company. In the opinion of management of the Company if the maximum number of Units being offered is sold, the Company may have sufficient working capital to achieve its expanded operations. However, there can be no assurance that even if the maximum number of Units is sold that the Company would not be required to seek alternative sources of financing. Management is not restricted in the application of the funds as provided within this Memorandum under the caption “Use of Proceeds” elsewhere in this Memorandum. There can be no assurance, express or implied, that if management were to require additional financing that management would not be required to subordinate the interests of those Units sold hereby to some subsequent financing or credit facility.

[THIS SPACE INTENTIONALLY LEFT BLANK]

22 | P a g e

DESCRIPTION OF CAPITAL STOCK Unit Holders have one vote per Unit on all matters to be voted upon by the Unit Holders. They are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Managing Member out of funds legally available thereof. In the event of a liquidation, dissolution or winding up of the Fund, the holders of Preferred Units (“Units”) are entitled to share ratably in all assets remaining after payment of liabilities. The Units has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions available to the Units. When fully paid for, all of the outstanding Membership Interests to be issued upon the funding of the private placement hereunder will be validly issued within 4 weeks, fully paid and non-assessable. Preferred Units - The Company has Preferred Units. Preferred Unit Holders will receive a + 6.5% annual return on “vested” funds, to be paid monthly, quarterly, or annually (to be determined once operations are underway in the Managing Member’s full discretion). “Vested” mean when funds are actually allocated to acquire a specific property. Example: the LLC received $500,000 in subscriptions in 30 days. An additional 30 days pass prior to the closing of Fund for this first acquisition. Investors would not receive a preferred return until after closing on this first property.*
* Example: the first property requires $400K in capital, the 6.5% preferred return will be computed on a pro-rata share of total $500K invested.

RIGHTS OF UNIT HOLDERS The Company, at its option, may answer all inquiries from prospective investors and/or their authorized representatives concerning the Offering, the Company and any matter relating to the offer and sale of the Units and may afford, at its option, the prospective Investors and/or their authorized representatives the opportunity to obtain any additional information necessary to verify the accuracy of any representation or information set forth in this Memorandum. TRANSFER AGENT The Company, through its Secretary or other authorized person, shall serve as the register and transfer agent for the Units. DIVIDENDS The Company has to date not paid dividends nor does it expect to in the immediate future. DILUTION If the Managing Member of the Company elects to issue additional Units and extend the offering by allowing the sale of additional Membership Interests as provided for under Terms of the Offering, each Investor may suffer a dilution of his or her interest in the Company.

(THIS SPACE LEFT INTENTIONALLY BLANK)

23 | P a g e

Tax Considerations
Tax Considerations The following discussion summarizes the material federal income tax aspects to the Members of an investment in the Company. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), the regulations there under, published administrative rulings, and judicial decisions in effect on the date of this Memorandum. No assurance can be given that future legislative or administrative changes or court decisions will not significantly modify the discussion contained herein. Any such changes may or may not be retroactive with respect to transactions completed prior to the dates of any such changes. The following discussion does not purport to deal with federal income tax consequences applicable to all categories of investors, some of which may be subject to special rules (for example, insurance companies, banks, foreign taxpayers and tax-exempt entities), nor does it discuss any aspect of state, local or foreign taxation. This summary is included for general purposes only and is not intended as a substitute for careful tax planning. PROSPECTIVE INVESTORS ARE URGED AND ADVISED TO CONSULT THEIR OWN TAX ADVISORS, LAWYERS OR ACCOUNTANTS WITH SPECIFIC REFERENCE TO THEIR OWN TAX SITUATIONS. Classification as a Limited Liability Company The Company is a limited liability company formed under the law of the State of Texas. State and Local Taxes In addition to the federal income tax consequences described above, prospective investors should consider potential state and local tax consequences of an investment in the Company. State and local laws often differ from federal income tax laws with respect to the treatment of specific items of income, gain, loss, deduction and credit. The Company may be subject to state and/or local tax, depending on the location and scope of the Company’s activities. In addition, a state in which a Member is not a resident but in which the Company may be deemed to be engaged in business may impose a tax on that Member with respect to his/her/its share of partnership income derived from that state. Under some circumstances, a Member with tax liabilities to more than one state may be entitled to a deduction or credit for taxes paid to one state against the tax liability to another. THE FOREGOING IS A BRIEF SUMMARY OF CERTAIN MATERIAL INCOME TAX MATTERS WHICH ARE PERTINENT TO PROSPECTIVE INVESTORS. THE SUMMARY IS NOT, AND IS NOT INTENDED TO BE, A COMPLETE ANALYSIS OF ALL PROVISIONS OF THE FEDERAL INCOME TAX LAW WHICH MAY HAVE AN EFFECT ON SUCH INVESTMENTS. THIS ANALYSIS IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING. ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN RESPECTIVE TAX ADVISORS WITH RESPECT TO THEIR OWN RESPECTIVE TAX SITUATIONS AND THE EFFECTS OF THIS INVESTMENT THEREON.

24 | P a g e

ADDITIONAL INFORMATION During the course of the Offering and prior to any sale, each offeree of the Preferred Units (“Units”) and his or her professional advisor(s), if any, are invited to ask questions concerning the terms and conditions of the Offering and to obtain any additional information necessary to verify the accuracy of the information set forth herein. Such information will be provided to the extent the Fund possess such information or can acquire it without unreasonable effort or expense. Each prospective investor will be afforded, and should seek, the opportunity to obtain any additional information which such prospective investor may reasonably request, to ask questions of, and to receive answers from, the Fund or any other person authorized by the Fund to act, concerning the terms and conditions of the Offering, the information set forth herein and any additional information which such prospective investor believes is necessary to evaluate the merits of the Offering, as well as to obtain additional information necessary to verify the accuracy of information set forth herein or provided in response to such prospective investor’s inquiries. Questions regarding this Offering should be directed to:

Company Overview
The current national economic woes have created a tremendous opportunity, specifically within the multifamily real estate and multifamily capital marketplace. Market conditions along with the current administration has created a significant yield spread/pricing gap between stabilized, well operated properties and distressed multifamily assets. Agency lenders such as Fannie Mae and Freddie Mac are producing over 80% of multifamily loan volume. The remaining 20% of volume is distributed between HUD, regional and national portfolio loans, hard money and bridge lenders, and local interim bank financing. This capital distribution model offers a very competitive array of options for the acquisition of stabilized multifamily assets, but offers very little options for the acquisition of distressed multifamily assets. The multifamily property market has adjusted to this capital marketplace and prices for quality distressed asset buyers have significantly dropped to generational lows, while stabilized multifamily asset prices have dropped much less. Scarlet Matador Fund’s management team has over 10 years experience is the successful identification, acquisition, renovation, stabilization, management, marketing, and disposition of distressed multifamily assets. The management team’s deal-flow has outgrown their capital resources and has elected to create the Scarlet Matador Fund, LLC to exploit the current inefficiency that they have identified within the market. Property Management Inc (PMI) is a wholly owned company of fund management; they provide 3 rd party services to the multifamily industry such as: property management, construction management, bookkeeping/accounting, and brokerage services. PMI has been engaged to provide all of these services to all assets owned by Scarlet Matador Fund, LLC. This will not only streamline the Fund’s operations but will eliminate any “overhead” or administrative expenses for the Fund. Need These uncanny market conditions have created a solid opportunity for sophisticated investor/buyers that have a real understanding of the complex dynamics of today’s multifamily marketplace. Distressed assets buyers in this marketplace are filling a direct need of the marketplace, creating a previously unseen opportunity for the creation of tremendous stakeholder wealth. Many unconventional sellers such as special servicers, receivers, lenders, banks, federal agencies, and so on are in dire need of experienced operators to acquire these distressed assets at significantly below market prices, in order to clean up balance sheets of lending institutions. They are increasing only seeking to deal with experienced distressed asset buyers that can move quickly and can be depended on to close. These relationships are one of the key factors in the Scarlet Matador Fund’s management’s previous success. Solution
Scarlet Matador Fund, LLC; taking full advantage of the inefficiencies in today’s capital marketplace

The basic business model for the Scarlet Matador Fund, LLC is one that has been created and adopted by the management team of the Fund. There are always minor inefficiencies within the multifamily capital and real estate markets, but today’s other economic conditions have drastically magnified these inefficiencies. Fund management has been involved in this specific industry for over ten years and has completed multiple successful rounds of acquisitions and dispositions.

Fund management has recognized the rare opportunity in today’s marketplace and has exploited the opportunity to their fullest ability. They currently have four large projects going. Their deal-flow and management capabilities are far greater than their own capital resources. As a result they have formed the

27 | P a g e

Scarlet Matador Fund, LLC to not only seize the current opportunities of today’s marketplace, but also to create investor wealth. Market Scarlet Matador Fund, LLC’s ultimate goal is to acquire assets at deep discounts and in turn re-sell them at marketable prices for a large capital gain. This objective is more widely possible due to the unusual circumstances of the current capital marketplace. The market for these distressed assets is a very tightly knit community, mostly relationship driven. Unconventional sellers previously turned to more traditional marketing methods such as broker networks, MLS databases, and internet databases. These methods have proven successful for marketing stabilized, well operated properties to conventional investors seeking stabilized market returns. But these methods have proven to be far less successful in disposing of distressed multifamily assets. This is due to the fact that the vast majority of stabilized asset investors do not understand the acquisition and repositioning of said multifamily assets. Distressed asset sellers were overwhelmed with multiple “over market” offers from foreign and domestic “syndicate groups” that had never even seen marketed property. They were overwhelmed in sorting through potential purchasers trying to determine the credibility of numerous unqualified offers. These sellers soon realized the importance of dealing with professional investors, with seasoned track-records; a buyer that they could count on offers being real and count of a seamless closing. These market circumstances have in turn drastically eroded pricing on distressed assets along with circumstances previously discussed regarding the capital marketplace. Competitive Advantage Scarlet Matador Fund, LLC’s competitive advantage within this niche marketplace is our ability to be nimble and act quickly. The management team’s deep experience in distressed assets has garnished them the investor confidence to move quickly and avoid a bureaucratic underwriting model that is prohibitive to meeting market demands. Their relationship with PMI also affords them the ability to reduce operating cost and avoid spending unnecessary time building a corporate infrastructure at the cost of the fund and investors. Fund management can devote all of their time and resources to fund assets. Another important advantage of Scarlet Matador’s relationship with PMI is the comprehensive approach that they take to the renovations, stabilization, management, and accounting of each subject property. PMI offers comprehensive asset management services to the Fund at below market pricing that far exceeds market quality. Revenue Model Scarlet Matador Fund, LLC operates on a variety of revenue models:  The primary, most significant revenue source is the acquisition and re-sell of fund assets. This is typically a 20 month or less cycle and includes: acquisition, renovation, stabilization, marketing, and disposition. The bulk of investor returns will be generated via this revenue model; all capital gains will be paid out in dividends on a proportionate equity ownership basis upon each sale. Each property will also generate its own individual income, investor distributions will also be paid on access cash flow dividends. Investors will also be paid on preferred equity, upon being vested. These dividends will be paid via operating income of said properties.

 

28 | P a g e

Financials    Scarlet Matador Fund, LLC will launch its investment activities upon the successful raise of $500,000.00, it will then proceed to continue raising the target amount of $9,890,000.00 The Fund will leverage its funds to maximize investor/principal returns. The management team currently has the necessary deal flow to acquire maximum fund assets in a maximum of a 12 month period. Preferred returns will be generated as soon as funds are vested into said projects, cash flow dividends will be generated upon stabilization of Fund assets, and capital gains income will be generated roughly 20 months from initial investment.

Exit Scarlet Matador Fund, LLC is a fixed life opportunity fund, and aims to return invested capital at the end of fund operations. The management team anticipates being able to, at minimum, turn through principal investment, two times, before the predetermined five year lifecycle of the fund. People Brent D Preston, Managing Member and Fund Manager – Mr. Preston is a seasoned multifamily asset manager with a successful track record in repositioning distressed multifamily assets. He also brings a strong property management and construction management background to the fund. He is primary owner of Property Management Inc (PMI) who provides a suite of industry services to his current projects and to other 3rd party property owners. Mr. Preston is a Cum Laude graduate of the Rawls School of Business at Texas Tech University and an active Texas Real Estate Broker. Partner/Analyst: Aaron Morris Aaron Morris is actively involved in the operational side of PMI, he has a Texas real estate license and is a graduate of Texas Tech University. Aaron began his real estate career in the brokerage business, working at a large multi-national brokerage firm. He then joined the PMI team, and expanded his expertise into operational management, and project underwriting. Mr. Morris began Morris consulting in early 2006; he is currently engaged in multiple real estate repositioning projects throughout Texas. He is a key element in maintaining acceptable deal flow and underwriting of potential acquisitions. Investor Relations: Eric Morris Eric Morris recently ended his career as a professional football player; he formerly played division 1 football at Texas Tech University, where he was a two year starter. He brings a dynamic background to the Fund and will be engaged as investor relations liaison and will also assist Aaron Morris in underwriting potential acquisitions. Controller/PMI Liaison: Wendy Hinkle Wendy Hinkle started out her real estate career in the brokerage sector, handling mostly residential transactions. She later joined The FlagStar Group in 2005 as executive assistant to Mr. Preston. Ms. Hinkle holds a Texas real Estate License.

29 | P a g e

Throughout the years Ms. Hinkle’s capacity within The FlagStar Group, and then PMI, has grow. She will oversee all aspects of the PMI/Scarlet Matador Fund relationship. Ms. Hinkle has many years of hands on experience in the repositioning of multifamily assets, under the guidance of Mr. Preston. Advisory Board See Appendix B for Advisory Board biographies.

Plan of Operation
Scarlet Matador Fund, LLC is a newly formed “opportunity fund” that is raising capital for the purpose of investing in distressed multifamily assets. The Fund is newly formed and has not yet made any investments or generated any return, thought the Fund manager is currently active in this niche marketplace and posses a very successful track record in doing so. The proceeds from this Offering are expected to satisfy all of the cash needs for the entire lifecycle of the Fund (5-years). Scarlet Matador Fund, LLC is an investment fund that will identify, acquire, reposition, and re-sell distressed multifamily assets, under the guidance of Fund Manager, Brent D Preston. The Fund intends on investing in two rounds of investment during the 5-year lifecycle of the Fund. During this 5-year lifecycle the Fund will pay out preferred interest, cash flow dividends, and all capital gains from the re-sell of assets; it will retained original principal invested equity for re-investment in round two. All originally invested principal funds will be returned before the end of the fund lifecycle (5 years). Scarlet matador Fund will own specific assets via owning 100% of units in Single Purpose Entity’s (SPE), LLC’s, created specifically for ownership in each asset. Scarlet Matador Fund, LLC will utilize all feasible opportunities to use 3rd party debt leverage to maximize returns for stakeholders. 3rd party debt providers may consist of local community banks, regional banks, national banks, institutional lenders, assumption of current debts, asset based lenders, hard money lenders, bridge lenders, AITD financing, owner carry loans, and so on. Scarlet Matador Fund, LLC will operate fully transparent to investors, they will receive monthly operating reports, professionally prepared by Property Management Inc.

(THIS SPACE LEFT INTENTIONALLY BLANK)

33 | P a g e

Market Analysis

Industry Defined: Scarlet Matador Fund, LLC will operate within the multifamily marketplace, primarily in the Texas and the Midwest. Distressed assets within this marketplace are victims of the current turmoil within the capital marketplace. The absence of attractive bridge and interim financing options have created a significant pricing gap between stabilized assets, that qualify for attractive agency financing, and distressed, sub-performing, assets. Scarlet Matador Fund, LLC’s management team has actively been involved within this marketplace. Even in the greatest of economic times, in the most liquid market environment, poor operators created opportunity in the acquisition and repositioning of distressed assets. Fund management has been acquiring, repositioning, and re-selling troubled assets for over 10 years, operating within a modest deal flow model using their own leveraged capital. Today’s economic circumstances have created an uncanny opportunity for fund management to leverage their market knowledge and experience and 3rd party equity investors, looking to capitalize on distressed multifamily assets, to create an enormous wealth creation mechanism, the Scarlet Matador Fund, LLC. Target Market: Scarlet Matador Fund, LLC has a complex target market that is very complex and codependent in nature. The ultimate target market is multifamily investors seeking stabilized multifamily assets that provide cash-flow, appreciation exposure, tax shelters, and leveraged real property returns. This target market is highly dependant on specific market characteristics such as available long-term debt/financing options and availability, availability of performing assets available on the open market, and ultimately the micro and macro characteristics of the rental markets in said sub-markets. Multifamily assets value is a function of the income that it produces and the availability of capital to acquire such assets.

(THIS SPACE LEFT INTENTIONALLY BLANK)

34 | P a g e

Marketing Plan
The Purpose The Purpose of this plan is to quantify and explain to potential investors the deal flow mechanism used by Scarlet Matador Fund, LLC to identify attractive distressed multifamily projects. The old adage “you make your money when you buy it” is profoundly correct in the distressed asset repositioning and re-sell business; hence our marketing plan is focused on acquisitions. The disposition element of our business plan is comprehensively handled by PMI, who has vast expertise in the maximized disposition on stabilized multifamily assets. The Goal    A 1st round divestment cycle of less than 15 months. A 2nd round divestment cycle corresponding to 1st round dispositions. A 5-year or less 2 round buy-sell cycle, or fund lifecycle.

The Target We will be targeting three primary distressed asset/ non-conventional seller groups:

The Plan Adequate deal flow is one of the key functions of the Scarlet Matador Fund, LLC. Fund management has created this deal flow through a successful track record of purchasing distressed assets from nonconventional sellers and proving their ability to move quickly and perform as represented. The bulk of deal flow will be fruits of these delicate relationships that fund management has successfully created over the previous 5 years. The specific identities of these contacts are a much protected trade secret of Fund management but here are a few examples of these contacts:     Special Servicers of CMBS defaults Institutional brokers Asset managers of REO assets Court appointed Receivers

Fund Management has created a basic model of the characteristics that they seek in potential acquisitions, their network of unconventional sellers and brokers present such deals to Fund Management. Management reviews many deals, and when one somewhat meets criteria on paper they immediately schedule a site visit for further review by management team. All identification, underwriting, and acquisition procedures are handled directly by senior Fund Management, specifically Mr. Preston.

35 | P a g e

SWOT Analysis
This SWOT analysis summarizes Scarlet Matador Fund, LLC’s (“Fund”) current situation it regard to our internal strengths and weaknesses along with identifying the potential opportunities and threats that exists in our marketing environment. Due to the fact that the Fund’s management team is currently successfully investing in distressed multifamily assets and has an extremely successful extended track record in doing so, the opportunities are high and the threats are low.

Strengths

Capitalize Strengths

1. Fund Manager, Brent Preston, has extensive knowledge 1. Mr. Preston will guide the Fund in the right direction in and experience in distressed multifamily assets. order to achieve greatness. 2. The Fund’s relationship with PMI allows opportunity to maximize invested funds by eliminating normal overhead 2. The pre-existent professional staff has an in depth and operational expenses associated with launching a new understanding of the overall deal management of venture. distressed assets; the entire key infrastructure is already in place. 3. Mr. Preston has established numerous key relationships with distressed asset sellers and has achieved a consistent ant deal flow mechanism. Weaknesses 1. Lack of guaranteed preferred leverage. 2. Lack of “Opportunity Fund” operational experience/track record. Opportunities 1. Current market conditions have created the “perfect storm” in the multifamily industry. 2. Special servicers are faced with liquidating a growing number of CMBS financed properties, at incredible “below market” pricing. 3. Multifamily operations are minimally effected by a down economy; people still have to have a place to live. Tighter credit standards have actually grow the tenant base at the expense of the homeowner pool declination. 3. The creation of the Fund will allow Mr. Preston to maximize his established relationships in identifying substantial below market transactions and create enormous stakeholder wealth. Address Weaknesses 1. The Fund is currently establishing relationships with multiple debt sources, fund objectives still make financial sense on all cash/equity, worst case basis. 2. Fund Management will apply all of its past experience to the objectives of the Fund. Maximize Opportunities 1. The Fund is able to acquire distressed assets at ALL TIME lows, and re-sell at stabilized market pricing. 2. The Fund can maximize this pricing gap and turn through transactions as quickly as possible, with a dependable deal flow. 3. The fund will maximize operational revenues through PMI’s management and leadership, in doing so increase market benchmarks such as NOI’s and GRM’s.

Threats 1. A decline in the availability of stabilized multifamily

Minimize Threats 1. Part of the Funds underwriting criteria looks at the actual mechanics of each Fund acquisition, and value is

36 | P a g e

asset debt options.

real, not created by a subsidized or artificial cost of funds 2. Fund Management realizes that there are other similar and larger competing firms, our edge on those organizations is keeping things simple and staying nimble. Reaction time is so crucial in dealing with distressed asset acquisition.

2. Competition organizations.

from

Larger

“Opportunity

Fund”

(THIS SPACE LEFT INTENTIONALLY BLANK)

37 | P a g e

Exit Strategy The #1 objective for Scarlet Matador Fund, LLC is to build an exceptional investment vehicle for sophisticated investors to passively take advantage of the tremendous opportunities created by the turmoil in today’s multifamily capital marketplace. Fund management intends on turning leveraged equity capital a minimum of two times with in the 5-year fund lifecycle. The ROI strategy is as follows: (i) Capital Return. The primary fund objective is to acquire, reposition, and re-sell Fund assets; hence this is the most significant return mechanism for stakeholders. Investors will be paid a prorata share of all capital gains earned form the re-sell of each Fund asset. Estimated prorate share of gains for the life of the fund total approximately $8,600,000.00 (ii) Preferred Unit Interest Return. Investors will receive a 6.5% preferred unit return on all vested funds. This return will be computed and paid monthly. Total estimated preferred interest will be approximately $2,172,080.00 over the 5 year life of the Fund. (iii) Cash Flow Dividends. Investors will be paid a prorata dividend on property cash flow between the stabilization phase and the disposition of individual Fund assets. Gross dividends to investors are estimated to be $742,457.88. The following total return compilation is based on $9.98M invested. .

THIS QUESTIONNAIRE DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY A SECURITY OR MAKE A LOAN. ITS SOLE PURPOSE IS TO ESTABLISH WHETHER THE PERSON ANSWERING THIS QUESTIONNAIRE IS AN ACCREDITED INVESTOR. ALL INFORMATION CONTAINED HEREIN WILL BE KEPT STRICTLY CONFIDENTIAL.

Scarlet Matador Fund, LLC Mr. Brent D Preston 7111 Santa Fe Dr Lubbock, TX 79407 Tele: 806-470-0464 Gentlemen/Ladies: The undersigned (the “Prospect”) hereby agrees and acknowledges that Scarlet Matador Fund, LLC (or the “Fund”) has the right to reject any offer for any reason. The undersigned acknowledges that the sole purpose of this questionnaire is to determine if the undersigned is an “accredited investor” as that term is defined by SEC Rule 501. The undersigned represents and warrants that the information contained herein is true and correct and the Scarlet Matador Fund, LLC will rely on the information contained herein provided by the undersigned. Any false or misleading information provided by the undersigned could result in a violation of state and federal laws. The undersigned prospect agrees to immediately notify Scarlet Matador Fund, LLC of any material change in the information provided by the undersigned. If the undersigned Prospect is a partnership, corporation, limited liability partnership, trust or other entity the person executing this questionnaire represents and warrants to Scarlet Matador Fund, LLC that he or she has the necessary power and authority. Please indicate the form of ownership you typically hold you investments in:
_______ Individual _______ Joint Tenants with right of survivorship _______ Trust _______ Entity - Type: ______________________

57 | P a g e

PART A (ALL PROSPECTS AND JOINT PROSPECTS MUST COMPLETE)

1.

Name of Prospect/s:

Date of Birth/s:

2.

Home Address of Prospect/s:

Home Phone of Prospect/s:

3.

Business Address of Prospect/s: ________________________________________________________________________ Business Phone of Prospect/s:

PART B The undersigned is an accredited investor because the undersigned satisfies one or more of the following criteria. Please select one or more of the appropriate criteria: _____ 1. The undersigned is a natural person whose current net worth, or current joint net worth of the undersigned and spouse of the undersigned, is in excess of $1,000,000.

_____ 2. The undersigned is a natural person who individually for each of the last two years had income in excess of $200,000 and reasonably expects to have income in the current year in excess of $200,000.

_____ 3. The undersigned is a natural person who had joint income with his spouse which was in excess of $300,000 in each of the two most recent years and reasonably expects joint income of $300,000 in the current year.

_____ 4. The undersigned is an entity, such as a partnership, corporation or trust, in which all of the equity owners of the entity are accredited investors under any of the foregoing subparagraphs.

_____ 5. The undersigned is an entity, such as partnership, corporation or trust whose purchase is directed by a “sophisticated person”, which has total assets of $5,000,000 and was not formed for the specific purpose of acquiring securities.

60 | P a g e

PART C Please indicate your investment experience with each of the following asset classes.

I hereby certify that I have answered the foregoing questions to the best of my knowledge and that my answers and information provided hereon are complete and accurate. Dated this _____ day of ____________________, 2010

Signature of Prospect/s

Print name of Prospect/s

62 | P a g e

Exhibit C SCARLET MATADOR FUND, LLC CONFIDENTIAL SUBSCRIPTION AGREEMENT I hereby agree to purchase ________________ Preferred Membership Interest (hereon “Units”) of Scarlet Matador Fund, LLC, a Texas limited liability company (the “Fund”), at a purchase price of $20,000 per Unit, with a minimum investment of $40,000 for 2 (Two) Units for a total purchase price of $______________. In fulfillment of the obligation to make such a purchase, I hereby tender the full subscription amount in the form of a check, draft, or money order payable to the Fund. Conditions to Receipt and Acceptance: The offer to become a Unit Holder hereby made shall be deemed to be accepted by the Fund only upon the Fund’s execution of the acceptance set forth below. A. Representations and Warranties. I represent and warrant to the Fund as follows: I declare that I am at least 21 years of age and am a bona fide RESIDENT of the United States of America or foreign government recognized as such by United States of America and I am an accredited investor as defined by the definitions below. ____________Initials

OR I am or represent an organization, which meets or exceeds at least one of the accreditation requirements contained within this subscription agreement. (1) Initial all of the following that apply:

____________A bank as defined in section 3(a)(2) of the Act, or a savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; a insurance company as defined in section 2(100) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered adviser, or if the employee benefit plan has total assets in excess of $1,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; _____________A private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

63 | P a g e

_____________An organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; _____________A director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; _____________A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000; _____________A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; _____________A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person; and ____________An entity in which all of the equity owners are accredited investors.

(2) I have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of my investment in the Fund, or I have obtained the advice of an attorney, certified pubic accountant or registered investment advisor with respect to the merits and risks of my investment in the Fund. ____________Initials (3) I acknowledge that the Fund provided me with a copy of the Memorandum, which discloses in reasonable detail all material details of the offering, at least forty-eight (48) hours before my return of this executed Subscription Agreement to the Fund. ____________Initials (4) I am purchasing the Unit solely for my own account for investment and not for the account of any other person and not for distribution, assignment, or resale to others. I do not presently intend to resell, transfer, or otherwise dispose of the Units. Prior to any such sale or transfer, I will deliver to the Fund a written opinion of counsel stating that the securities registration requirements of the Federal Securities Act of 1933 and of all applicable state laws including, but not limited to, any Uniform State Securities Act, have been or are being met or that an exemption from such registration is available and that the sale may proceed without violating any of the applicable state or federal securities laws. ____________Initials (5) I understand and acknowledge that the Operating Agreement of the Fund places severe limitations on my ability to transfer the Unit. ____________Initials (6) I acknowledge that any certificates (if such should ever be created) evidencing Membership Unit(s) shall bear a legend restricting the transfer of the Units. ____________Initials (7) I and all of my advisors have had access to all information necessary to enable me to make an informed decision to become a Unit Holder and a reasonable opportunity to ask questions of and receive

64 | P a g e

answers from the Fund concerning the terms and conditions of this offering of the Units. All such questions have been answered to my full satisfaction. ____________Initials (8) I have the financial ability to bear the economic risk of my investment, including a possible loss of my entire investment, have adequate means of providing for my current needs and contingencies, and have no need for liquidity in my investment in the Fund. ____________Initials (9) The Units constitutes an investment, and my financial situation enables me to bear the risks of this investment. ____________Initials (10) I understand that the offering has not been registered under the Securities Act of 1933, as amended (the “Act”), nor the securities laws of any other jurisdictions. Instead, the offering is made in reliance upon certain exemptions, including the exemption for federally “covered securities” under 4(2) Regulation D 506 and the accredited investor exemption 4(6) promulgated thereunder. I am aware and understand that the Units for which I have subscribed are being sold to me in reliance upon the above referenced exemptions and based upon my representations, warranties, and agreements hereunder. I am aware of the restrictions on the sale, transferability, and assignment of the Units and that I must bear the economic risk of my investment hereby for an indefinite period of time because the Units have not been registered under the 1933 Act. ____________Initials (11) I understand that no federal or state agency has made any finding or determination as to the fairness for investment in, or any recommendation or endorsement of, the Units. ____________Initials (12) I acknowledge that neither the Fund nor any of its employees, managers, agents, or other affiliates have made any oral or written representations to me or to any of my advisors which are inconsistent with the Memorandum in any way. ____________Initials (13) I have included with this Subscription Agreement my capital contribution in full to the Fund for the Units. I understand that moneys will be escrowed until the Minimum Offering is subscribed for, after which all funds may be used by the Fund immediately. ____________Initials

(14) To the extent I considered it advisable, I have reviewed the merits of this investment with my tax and legal counsel and with an investment advisor. ____________Initials (15) I understand and acknowledge that no public market for the Units currently exists and that there can be no assurance that any public market for the Units will exist in the future. ____________Initials (16) All of the information that I have provided to the Fund concerning myself, my financial position, and my knowledge of financial and business matters, including the information contained herein, is correct and complete in all material respects as of the date set forth at the end hereof, and I will immediately notify the Fund of any adverse change in such information prior to the Fund accepting my offer to become a Unit Holder. ____________Initials

65 | P a g e

(17) I agree that all of the foregoing representations, warranties, agreements, undertakings, and acknowledgments made by me shall survive my purchase of the Units. I further agree that if more than one person is signing this agreement, each foregoing representation, warranty, agreement, undertaking, and acknowledgment shall be a joint and several representation, warranty, agreement, undertaking, and acknowledgment of each person signing this agreement. ____________Initials (18) I declare that I was not induced or solicited to invest by any form of general solicitation or general advertising, including but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over the television or radio. Including any seminar or meeting in which attendees had been invited by a general solicitation or general advertising. ____________Initials (19) I declare that I understand Scarlet Matador Fund, LLC has a first right of refusal to purchase any and all Units, which are noticed for sale or liquidation. ____________Initials (20) I declare that I am not relying on the accuracy of the financial data contained within the pro forma projections contained within Exhibit A of the Private Placement Memorandum dated January 1, 2010. ____________Initials (21) By executing this Subscription Agreement, I hereby agree to become a Unit Holder of the Fund under the existing Operating Agreement of the Fund and to be bound by the terms of such agreement as though I were an original signatory thereto. ____________Initials (22) I agree to indemnify and hold harmless the Fund, its promoters, Unit Holder, managers, and affiliates or any one acting on their behalf from and against all damages, losses, costs, and expenses (including reasonable attorney fees) that they may incur by reason of my failure to fulfill any of the terms or conditions of this Agreement or by reason of any breach of the representations and warranties made by me herein or in any documents provided by me to the Fund. ____________Initials (23) This Agreement constitutes the entire Agreement among the parties with respect to the subject matter hereof and may be amended only by a written instrument executed by all of the parties. ____________Initials This Agreement shall be enforced, governed, and construed in accordance with the laws of the State of Texas. Investor Signature _________________________________ Investor Signature Date ____________________________ Date

PLAN OF DISTRIBUTION RECAP The Preferred Units (“Units”) are being offered only to sophisticated and “accredited investors” as defined under Regulation D of the Securities Act. The Units will be offered and sold on behalf of the Fund by its officers and directors on a “best efforts” basis. The Fund may engage broker/dealers that are members of the FINRA to assist with the Offering. In that event, cash commissions of no more than 5% (five percent) of the total amount of subscriptions sold will only be paid to such brokers/dealers. The maximum amount of commission payable by the Fund therefore shall not exceed 5% (five percent). The Fund may agree to issue to such FINRA broker/dealers Units of the Fund’s Units equal to up to 5% of the Unit sold in this Offering. If the Fund engages any FINRA broker/dealers in connection with this Offering, it may indemnify them against certain civil liabilities, including liabilities arising under the Securities Act that may arise in connection with this Offering as a result of disclosures for which the Fund is responsible. The FINRA broker/dealers would pay their own costs and expenses in connection with the Offering in excess of the selling commissions and expense allowance described above. There is no firm commitment to purchase any of the Units. The Offering will continue without any provision for refund unless the Minimum Offering is not subscribed for. All proceeds generated from the sale of Units will be escrowed until the Minimum Offering is subscribed. See “Use of Proceeds.” Other than this Memorandum, the exhibits hereto, no other offering literature will be employed in the offering of the Units. METHOD OF SUBSCRIPTION Each person intending to purchase the Units offered hereby, must deliver the following items to the Fund: 1. A check in the amount of at least $40,000 or multiples thereof, bearing in mind that each investor must purchase 2 (Two) Units as whole. Therefore, upon purchasing more than 2 Unit, persons must add an additional $40,000, made payable to “Scarlet Matador Fund, LLC”; 2. A completed and signed Purchaser Questionnaire, a copy of which is attached hereto as Exhibit B; and 3. A completed and signed Subscription Agreement, a copy of which is attached hereto as Exhibit C, with the number of Units desired indicated thereon. These items should be delivered to Scarlet Matador Fund, LLC at: Mr. Brent D Preston 7111 Santa Fe Dr Lubbock, TX 79407 Upon acceptance of a subscription, confirmation of such acceptance will be sent to the subscriber. The Fund reserves the right to reject any subscriptions or portions of subscriptions at its own discretion.